compensation for on site manager

My husband and I are about to buy a small 10 room beach motel in a small California town. I have been working the motel for the past year and my husband just started working it. We plan on running it ourselves 5 days a week including all maintenance etc... At the moment there is an on site "manager" who lives on the property in a 1 plus bedroom cottage with her husband. Their current duties include 4 nights of night duty, maintaining the garden and cleaning one day a week. For this they get free rent plus utilities including laundry and cable plus $600.00 per month. We feel they should give us a few mores hours a week for what they are getting. What would be reasonable? Open to suggesttions please.

Ok-Im a little late on this but how big is the garden? what do they do in the garden? I am an avid gardener and when i was on assignment at another in (8 rooms) the gardening was an EXTRA for us-we got paid $400/mth just to maintain the garden-it was a pretty large garden but gardening is hard work and its a daily chore you cant just go into a garden once a week. What kind of cleaning, if they have to clean all the rooms once a week how long does it take to clean 10 rooms? and for being on night duty even if its uneventful most of the time, one time of a guest needing something takes care of the uneventful part.

$600/month to do all this? IMHO I think you are underestimating their worth.

Ok-Im a little late on this but how big is the garden? what do they do in the garden? I am an avid gardener and when i was on assignment at another in (8 rooms) the gardening was an EXTRA for us-we got paid $400/mth just to maintain the garden-it was a pretty large garden but gardening is hard work and its a daily chore you cant just go into a garden once a week. What kind of cleaning, if they have to clean all the rooms once a week how long does it take to clean 10 rooms? and for being on night duty even if its uneventful most of the time, one time of a guest needing something takes care of the uneventful part.

$600/month to do all this? IMHO I think you are underestimating their worth.

i agree. i paid a landscaping company $100 a week, just to cut the grass. nothing more. and it was extra if i wanted the grass taken away instead of left on the lawn. if the prior week was wet or the schedule got us lagging, and grass was long, it looked messy and was hard to walk through. we had no walkway in some areas

Another thought about the on-site manager. I have the impression that insurance premiums are much lower if you have someone on site at all hours, or maybe even a requirement you have someone on-site all hours, but especially overnight? And/or fire codes may require this unless, or even if, you have a fire/smoke alarm system that automatically calls the fire department? Something to check on? I'm guessing this may be part of why these folks have been in the picture under the current ownership and how the current ownership arrived at the compensation arrangement? Has this discussion somehow been missed in your doing your "due diligence" and/or waiving inspection, etc. contingencies prior to agreeing to purchase?

a place to live (yes with utilities) ... how much is the going rate for such a place? try to compare with similar places ... realistically.

$600 a month is NOTHING.

4 nights of night duty ... how many hours of actual work each night? you really need to do some digging to figure out how much work is required.

how much time to clean each week?

how much time is spent gardening?

this does not sound to me like they are being overpaid.

so you have to factor in how much similar housing is worth. and is it private? yes a cottage on the property but still on the property.

who cleans the rooms when guests check out? i assume they do not since you did not mention that

please do not rush to undervalue the work they are doing unless and until you do it yourselves so you can judge.

let's say there are four weeks in a month. that is only $150. a week. are they actual employees or paid by 1099? taxes and workers comp and insurance would make this a much much bigger sum.

have you spoken with them, seen a detail of how their time is spent?

do they keep a log? this happened last night, etc.

years ago, i did overnight care with 2 elderly ladies for a while. what did i do? 'nothing'. i stayed in their home as night relief for the aids who came in during the day. i was not asked to clean or cook or anything. i wanted to clean but it bothered the light sleeper of the two. i could sleep if i wanted to but it was not a comfortable sleep. for this i was paid $150 for 2 nights. worth it to them to feel safe in their home as they were housebound. but someone looking at the situation might think that it was ridiculous to pay me just to be there.

a 10 room property requires a lot of work ... an 8 room property for me was a HUGE amount of work. HUGE. and i paid help. they earned more money than i did! and i could not leave the place in their hands. not to mention the lack of uninterrupted sleep just by being available for random things in the middle of the night. are they doing checkins too? collecting payment? or basically just providing a sense of security by being onsite?

will they take over if you want to get away? like innsitters?

there were times when i felt i would pay anything just to NOT be in charge. just to close my eyes at night and ignore the door, the phone, the noises, the all of it. just to drive away or take a walk and not worry about the place. just to have a life outside from running the place because, in truth, i had none.

if you really feel you can handle it all yourselves, of course you can let them go and yes you can probably rent out the cottage.

Armen brings up some good points about employment law, payroll taxes, and worker's comp insurance. You definitely should get a handle on these things before buying the business.

Can't speak to California, but here in Maine, our worker's comp insurance premium is based on our payroll rather than hours worked, and most of our workers are lumped into one category (Hotel-Other) which has (so far for us) included building and grounds maintenance and general labor. The rate for Carpentry is much much higher (some of our payroll in the past fell in that category). If the people you are paying have been deemed to be independent contractors, then you can exclude them from your worker's comp insurance and avoid having to deal with payroll taxes, but the federal IRS (as well as the state Worker's Comp Board, etc...) tend to draw a very fine line distinguishing between who is an independent contractor and who is an employee, and can exact stiff penalties is you've mis-classified someone, so you really do want to know what you are doing in that regard.

With only 10 rooms and you and your husband both working the property, I would probably relieve them of their duties, take care of things yourself and turn their space into a rental. All of us here can tell you that if someone gets locked out at night or has trouble, it's us innkeepers that take care of it, no matter what time of day or night. It's just part of the job description.

You can always hire out gardening and housekeeping. Sounds like they've had it pretty easy for a long time.

With only 10 rooms and you and your husband both working the property, I would probably relieve them of their duties, take care of things yourself and turn their space into a rental. All of us here can tell you that if someone gets locked out at night or has trouble, it's us innkeepers that take care of it, no matter what time of day or night. It's just part of the job description.

You can always hire out gardening and housekeeping. Sounds like they've had it pretty easy for a long time.

Just had some more thoughts. As you may know, or if you have an accountant/lawyer/commercial real estate/business advisor in the picture, the wages you pay employees, on which you have to pay all the various payroll taxes and take the time to complete all the state and federal returns (or pay for someone to do so) INCLUDE the fair market value of the lodging and utilities, etc. provided, along with the $600 paid wages. In Washington state, these numerous payroll taxes include "worker's comp", which is based on hours worked times an occupation specific risk rated hourly tax rate. I'm guessing California works the same? If so, it would seem you'd have to come up with some # of hours worked for those "night duty" shifts, as you've as much as indicated that there are some hours expended attending to lock-outs, etc. And right there you've opened a potential "pandora's box" of implications. E.g. in Washington, there's one rate for office work, that might apply for a late check-in or lost key replacement, but a higher one for maintenance work, gardening, room cleaning, etc. where the potential for back injuries, etc. get into the taxation hourly rate.

If you follow Breakfast Diva's suggestion, and it's feasible to have the outgoing owner handle the dismissal BEFORE you take ownership, you could avoid all the paperwork and etc. that would "go with the territory" of having them as employees vs if you do it even if it's only a day into your ownership, which means maybe having to do at least 4 sets of quarterly returns (Federal 940, 941, California Employment security, worker's comp, ?) for just one day's pay before you "relieve them of their duties"?

As I say, just a thought. To soften the blow, you could give them a month's free rent, as you may have to give notice anyway under California law for what may be a residential tenancy? Or build that into the purchase price if it's not already a done deal? Don't know your landlord tenant laws, so just making more educated guesses.

With only 10 rooms and you and your husband both working the property, I would probably relieve them of their duties, take care of things yourself and turn their space into a rental. All of us here can tell you that if someone gets locked out at night or has trouble, it's us innkeepers that take care of it, no matter what time of day or night. It's just part of the job description.

You can always hire out gardening and housekeeping. Sounds like they've had it pretty easy for a long time.

Breakfast Diva may have the best answer, and would eliminate the research ("A") and concerns ("B") in my comment minutes ago.

They just have to be there in case of an emergency..ie: someone gets locked out of their room, or the pilot light wont start. etc... For the most part it is very uneventful. especially during the off season.

They just have to be there in case of an emergency..ie: someone gets locked out of their room, or the pilot light wont start. etc... For the most part it is very uneventful. especially during the off season.

Two parts/issues to this comment in the order they presented themselves - but "B" is the more interesting and potentially concerning for you, IMHO:

A. In response to your initial question about overall compensation for what they are doing, it seems to me, obviously without knowing any details (i.e. your local wages, etc.) that a starting point is to add up all the hours the work you described would require per month, multiply times some appropriate hourly rate, and compare to the local fair market rental value of their lodging, utilities, cable, laundry plus the $600 you mentioned. Then adjust up or down as appropriate for the intangibles or whatever makes sense? The closest analogy to this might be resident managers in apartment buildings - see if you can find out what they are compensated in your local area and use as another point of departure? An inquiry call to an apartment house real estate management company might get you a one minute briefing on what they pay apartment house resident managers and go from there. It might be so many $ per month per unit in a buidling, in rental value and/or $. And/or call a few local hotels and see what they pay night desk clerks or check want ads for hotel staff?

So, for example, 4 nights a week night duty at, say, 8 hours per shift (?), times the average 4.33 weeks per month, at, say, $15 an hour, is $2,078 (check my math). Add the hours x hourly rate for the gardening and cleaning you mentioned. How does that compare to the rental value, etc. per above plus $600?

B. Per comment #1:

"what is required for night duty? ie are they asleep unless something extraordinary happens? if they are expected to be awake - this is something else entirely.", followed by your response @ #2...

This seems a dicey situation. There are labor laws - Federal and State, about having to compensate "on-call" workers, awake or not, and this sounds like your situation. Especially when they are living on your - the employer's - premises, as you described. Maybe you already know all this and plan to compensate accordingly, or build into the compensation package with an assigned hourly rate for those night hours, maybe at a lower rate, but still at least the legal minimum wage? I'm not a lawyer, but you might want to check with one, or check local large law firms' websites for on-line employment law newletters that allow you to search this topic for an article based on your state labor laws, or maybe your state B&B or lodging association can help? If you violate a law like this one, and the employee someday finds out they're owed for uncompensated time, you could face a ruinous claim for back wages, maybe treble damages (in Washington state), legal fees, etc. And I don't think any insurance policy will cover such a claim. All they need do is be talking to a lawyer relative, call a lawyer radio show, hear a news article about some class action lawsuit and get the idea they've been wronged. Or read these posts?

Google: "employment law for on call hours" and you'll get a bunch of legal resources and Q&A postings at legal sites on this very issue. You can ask your question at such legal websites as www.avvo.com, www.lawyers.com, etc.

"It's pretty clear-cut that when you report to work and begin your duties, you're entitled to receive pay for your time. Gray areas occur when your employer wants you to stand by for duty when you're not technically on the clock. This is "on-call" time and it's required of employees frequently enough that the U.S. Department of Labor (DOL) has released guidelines to identify under what circumstances you should receive pay for these hours.

Location Matters

Under the Fair Labor Standards Act or FLSA, if you're physically at the location of your employer's business, you should receive pay for these hours even if you're not technically working."